Your Local Home Advisor

Back in 2006-2007, the market was at it's peak and them came crashing down. Will it happen again? It may not happen for the same reasons, but remember, there are market cycles. The inventory of homes for sale has been sparse for the past few years. That drove prices up. I was looking at homes in West Los Angeles, the other month, and I couldn't believe the relative shacks that were going for $800K. Who could afford to live in those run-down neighborhoods at that price? I was amazed as I couldn't think who would plunk down that kind of money (in a mortgage, yet) to settle in an area that was iffy at best.

Then there were condos that I saw, that were nice, going for about that same price, but the HOA fees were in the $500++ range, and some had more than one HOA fee. These were 2 bed/2 bath homes.

I live in the OC. My home is worth about that much, around $800K - and it is 2400 sq ft with 5 bedrooms and 3 baths - much bigger than those shacks in LA. It's in a nice OC neighborhood - but the people who want to live in LA have little choice. They don't want to come out to OC because their jobs are in LA, and with traffic, they don't want to drive 2 hours to and 2 hours+ back. Even the train gives a commuter a lot of travel time.

So what to do? Prices will eventually come down, but to where? I doubt if they will go down to where they were in 2008. And the real question is - what are you going to do?

Real estate has always been a good investment, but you have to invest wisely. You have to buy low and sell high, not the other way around, and you have to know when to buy and when to sell. Rents will not be going down, even if home prices go down - so if you buy a rental home, you may have to start with negative cash-flow. Eventually, it will turn positive, rents will go up, and you will able to start your empire.

Back in 2006-2007, the market was at it's peak and them came crashing down. Will it happen again? It may not happen for the same reasons, but remember, there are market cycles. The inventory of homes for sale has been sparse for the past few years. That drove prices up. I was looking at homes in West Los Angeles, the other month, and I couldn't believe the relative shacks that were going for $800K. Who could afford to live in those run-down neighborhoods at that price? I was amazed as I couldn't think who would plunk down that kind of money (in a mortgage, yet) to settle in an area that was iffy at best.

Then there were condos that I saw, that were nice, going for about that same price, but the HOA fees were in the $500++ range, and some had more than one HOA fee. These were 2 bed/2 bath homes.

I live in the OC. My home is worth about that much, around $800K - and it is 2400 sq ft with 5 bedrooms and 3 baths - much bigger than those shacks in LA. It's in a nice OC neighborhood - but the people who want to live in LA have little choice. They don't want to come out to OC because their jobs are in LA, and with traffic, they don't want to drive 2 hours to and 2 hours+ back. Even the train gives a commuter a lot of travel time.

So what to do? Prices will eventually come down, but to where? I doubt if they will go down to where they were in 2008. And the real question is - what are you going to do?

Real estate has always been a good investment, but you have to invest wisely. You have to buy low and sell high, not the other way around, and you have to know when to buy and when to sell. Rents will not be going down, even if home prices go down - so if you buy a rental home, you may have to start with negative cash-flow. Eventually, it will turn positive, rents will go up, and you will able to start your empire.